Quarterly Market Insights: Q1 2023
Hello everyone, we would like to share some market insights about the past quarter. During the first quarter of this year, stocks within US Markets posted solid gains as investors navigated corporate earnings, shifting monetary signals, and troubles in the banking sector.
For the three months ending March 31, the Dow Jones Industrial Average rose 0.38 percent while the Standard & Poor’s 500 Index gained 7.03 percent. The Nasdaq Composite led, picking up 16.77 percent.
Stocks rallied in January, propelled by cooling inflation, a better-than-expected start to earnings season, and healthy economic data. Where investor sentiment had been weighed down by concerns over interest rates, a new, more upbeat mood surfaced.
January’s positive momentum carried over into February as stocks continued their climb. A 0.25 percent interest rate hike could not derail the upward momentum, as investors rallied around Fed Chair Jerome Powell’s constructive comments. However, strong economic data released over the course of February diminished investor hopes of a pause in rate hikes, which dragged stocks lower.
Stocks entered March holding onto modest year-to-date gains, but the final month of the first quarter would prove to be its most dramatic. Interest rate fears flared up once again, ignited by congressional testimony by Powell, who suggested that rates may need to be hiked higher and faster than the Fed had anticipated.
The difficulties within the banking system also changed market sentiment regarding future rate hikes. While the Fed raised rates 25 basis points in March, Powell hinted that the end of the rate-hike cycle was nearing. Stocks steadied as banking fears eased, notching gains at the close of the month and leaving stocks higher for the quarter.
